Mascareignes Sterling Co Ltd v Chang Cheng Esquares Co Ltd

An appeal from an arbitral award is confined by the parties’ arbitration agreement. Where that agreement permits an appeal only on questions of law, factual findings and assessments of evidential reliability are outside the appellate jurisdiction. A lump sum building contract remains a lump sum contract even where substantial design changes require additional or substituted work to be measured and valued. Contract rates may be used where the work is of similar character, executed in similar conditions and does not significantly change the quantities. Measurement and valuation of changed work therefore does not itself convert the contract into a measure and value contract.

Mascareignes Sterling Co Ltd, the employer, appealed to the Privy Council from the Supreme Court of Mauritius, which had dismissed its appeal on 30 August 2012. The underlying dispute concerned a 1993 JCT building contract for the design and construction of an office building. An arbitrator awarded Chang Cheng Esquares Co Ltd sums including the amount certified in a final account and dismissed the employer’s counterclaims.

The appeal concerned whether the arbitrator had erred in law in treating the contract and final account as he did, whether the arbitration involved a public-order violation, and whether the contractor was liable for mechanical and engineering works or under a related finance agreement.

1. Appeal dismissed. Under article 1027-1 of the Civil Procedure Code, the parties had an unqualified right of appeal unless restricted by their arbitration agreement. Clause 41.6 restricted the appeal to questions of law. The appeal to the Supreme Court, and consequently to the Board, was therefore confined to legal error. Findings of fact and assessments of witness or surveyor reliability could not be revisited.
2. The written contract was a lump sum contract. Its express terms fixed the contract sum and provided for adjustment only through specified contractual mechanisms. The arbitrator erred in construing it as a measure and value contract by reference to the parties’ subsequent conduct. That error did not affect the result because the parties had made radical changes to the building and the allocation of work.
3. Under clause 13.5, additional or substituted work in a lump sum contract could be measured and valued by the contract rates where it was of similar character, executed in similar conditions and did not significantly change the quantities. If the latter conditions were not met, fair allowances were required; if the work was not of similar character, fair rates and prices were required. The final account remained consistent with a lump sum contract, and the arbitrator disclosed no error of law in accepting it.
4. The public-order challenge failed. The Board expressed no concluded view on articles 1019 or 1027-3 because the missing transcript was not lost through the arbitrator’s fault. Other alleged irregularities were raised too late.
5. The claims concerning mechanical and engineering works and the finance agreement also failed. The arbitrator was entitled to find that the parties agreed to exclude the relevant works, that the employer suffered no loss for the design fees, and that the finance counterclaim was unsupported by the parties’ actual agreement and was not pursued on the basis of any breach.
6. The appeal was dismissed. The Board indicated that the respondent should receive the costs of the appeal, subject to written submissions within 21 days seeking a different order.

• Privy Council: The appeal from the Supreme Court of Mauritius was dismissed. The Board indicated that the respondent should receive the costs of the appeal, subject to written submissions within 21 days.
• Supreme Court of Mauritius: On 30 August 2012, the court dismissed MSC’s appeal from the arbitrator’s award.
• Arbitration: The arbitrator’s award dated 22 July 2005 awarded CCE Rs 22,784,189.80 with interest and dismissed MSC’s counterclaim.